Biotech and Generic Industries Lock Horns over Biosimilars

Follow-on proteins, biogenerics, biosimilars, comparable biologics, follow-on biologics, or generic biologics—whatever one calls them—the U.S. introduction of these drugs is both inevitable and plagued by devilish details.

Biosimilars are already on the market in much of the world including Europe. Many recombinant-protein biologics are costly. For example, a year’s worth of Genentech's cancer drug Avastin can total $100,000, although the company notes it offers the product free to low-income, uninsured patients through a patient-assistance program under certain caveats like a patient reaching a cap of 10,000 mg within a year. Sales of biologics totaled $94 billion worldwide in 2007, and they are the fastest-growing segment of the $600 billion pharmaceutical industry.

In a year likely to bring action on health reform as costs eat up a growing share of the economy, the pressure is mounting for the U.S. government to establish a pathway for biosimilars.

“The cost is so prohibitive; it’s almost like buying a house annually for some of these patients,” says Diane Dorman, vp for public policy at the National Organization for Rare Disorders, which launched the U.S. drive toward biosimilars with a summit in 2003. “We need to give doctors and patients a choice to remain with the branded product or move to a less-expensive competitor. Right now, they don’t have that luxury when it comes to biologics.”

Dorman also hopes a biosimilar pathway will drive innovator companies to develop novel drugs as they face smaller markets for their billion-dollar powerhouses, many of which have been on the market a decade or more.

Major Sticking Point: Data-Exclusivity Term

Several bills on biosimilars were introduced in the last session of Congress, but none passed. The generics and biotech industries locked horns over the term of data exclusivity. The biotech industry has pressed for a 14-year term, but the generic industry calls that excessive.

“We believe Hatch-Waxman should be the model,” says Charlie Mayr, a spokesman for the Generic Pharmaceuticals Association (GPhA). The Hatch-Waxman Act, passed in 1984, governs the generic drug approval process and protects conventional, nonbiologic drugs from generic competition for an average of 11.5 years, with generic competition entering the market two years later, on average, according to the Congressional Budget Office.

The Biotechnology Industry Organization (BIO) contends that the Hatch-Waxman process is not readily adaptable to large, complex biologics, which are produced in cells.

“You cannot put the square peg [of biologics] in to the round hole of Hatch-Waxman,” according to Greenwood. These products are challenging and expensive to develop and manufacture. That’s why, Greenwood says bluntly, “Our position has been 14 years and it’s not going to change.”

That position, however, might be a tough sell with the Democrats in control of Congress and the White House. President Obama’s budget outline, released last week, assumes federal health programs will save money by adopting biosimilars where possible.

Rep. Henry Waxman (D-Calif.), co-author of Hatch-Waxman, is still a leader on the issue and in 2007 introduced a biosimilars bill (HR 1038). His co-sponsors included then-Representative Rahm Emanuel, now the president’s chief of staff. BIO criticized that bill for lacking data-exclusivity provisions and in fact, containing “no prohibition on the FDA approving a follow-on product relying on innovator data immediately following approval of the original product.”

Waxman, a powerful member of Congress as chairman of the Committee on Oversight and Government Reform, is “not persuaded on our point of view on exclusivity,” Greenwood says.

The Devil Is in the Details

“The devil is in the details.” So say Dorman, Greenwood, and GPhA President and CEO, Kathleen Jaeger. Here are some of those details:

Nomenclature—The many, many terms for these products make googling on the issue a headache. The term of choice is often politically influenced, with GPhA adopting biogenerics, aligning the products with traditional generics, while BIO prefers follow-on biologics, which emphasizes the role of innovator companies and rejects the idea that a biologic could ever be a true generic.

Another nomenclature issue revolves around the WHO’s International Nonproprietary Name Program (INN), which manages generic naming of drugs worldwide. The INN selects a single, distinct name for the active substance of each pharmaceutical. With small molecule drugs, the nonproprietary name is usually the generic name, and it is used for both the branded product and any generic versions.

GPhA argues biosimilars should be treated the same way, citing the potential adverse impact that different names could have; physicians and consumers will perceive the biosimilars as different products. Which is precisely the point, says BIO. The organization claims using the same names “may lead to inappropriate assumptions about sameness and interchangeability of biological medicines.”

Substitution/Interchangeability—Generic drugs take over the market quickly in part because, even if a physician writes the branded name on a prescription, a pharmacist may substitute the generic product.

GPhA supports substitutability on a product-by-product basis. “Our position,” says Maryr, “is that the FDA should have the authority to say a particular version of a biologic is substitutable.”

BIO, not surprisingly, disagrees. In a December letter to the Federal Trade Commission, John Taylor, BIO’s evp for Health, writes, “It is BIO's position that patients and their physicians should decide the proper course of treatment including which biologic to take. No two biologics are identical, and some differences could have clinical implications that are not known at the time of approval.”

Evergreening—Pharmaceutical companies often extend the life of a drug by developing and patenting new formulations such as an extended-release version. Industry critics say the practice raises costs without providing the value of a true new drug.

Jaeger stated that to allow evergreening of biologics would help innovator biotechs maintain “their monopolies in perpetuity” and “would essentially prevent safe and affordable life-saving biogenerics from ever reaching patients.”

BIO naturally disagrees. Calling the term a misnomer, Greenwood says, “there’s a misperception that improving a product somehow thwarts generic companies from getting in the game. It doesn’t.”

Clinical Trials—Conventional generic drugs are cheaper in large part because their makers get to avoid clinical trials by showing their products to be the same chemicals as originator drugs and by doing small bioequivalence patient studies. GPhA says current advanced techniques for characterizing biologics make a similar process possible.

BIO policy counters that “clinical trial evidence and data are fundamental,” and immunogenicity testing, in particular, “is necessary to avoid putting patients at risk of adverse effects from immune reactions.”

Economic effects—A number of economic interests are at play in the biosimilar debate. Government, consumers, and insurers are hoping to save money on their health costs; biosimilar makers aim to make money on these products; and innovator companies are fighting to preserve profits for as long as possible.

At this point, all sides have found numbers to support their positions:

• GPhA touts savings of up to $378 billion over a 20-year period. A widely cited study by the pharmacy benefit management company Express Scripts found $71 billion in potential savings over 10 years.• A BIO analysis found the Express Scripts study as well as one by the Pharmacy Care Management Association flawed. BIO says biosimilar savings will be minimal and come at a cost of $41 billion in reduced R&D spending.

In June 2008, the Congressional Budget Office weighed in with an analysis of one of the biosimilars bills then under consideration (S. 1625). The CBO projected savings of $25 billion over a decade, about 0.5% of national spending on prescription drugs, and 0.065% of total healthcare spending over the period.

What’s Next?

Already, this decade patents have expired on recombinant protein drugs with sales totaling more than $10 billion, and generic companies are selling biosimilar products in Europe and Asia. According to GPhA, at least 42 companies are developing biosimilars.

Even large pharmaceutical companies such as Novartis (through its Sandoz subsidiary) and Merck (through its Merck BioVentures unit) are getting into the game. The only hurdle remaining, though, is that often devilish one: federal legislation.

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